Nokia’s new CEO Stephen Elop has written a remarkable memo to his Nokia employees–who, a few years ago, were comfortably working for the most successful cell-phone maker in the world (full memo here).

In the memo, Elop likens today’s stumbling Nokia to a “burning oil platform,” in which everyone who remains on deck will quickly be burned alive

We’ve been in business for nearly two decades now, and we don’t recall another CEO ever being this honest and vivid about the desperate straits his company is in. (We recall MANY companies being in these straits, however).

The normal CEO approach in a situation like this is either delusional denial–(“this concern about BlackBerry’s future is ridiculous–iPhones are just fluffy consumer devices”)–or a more nuanced evaluation of the company’s strengths and weaknesses combined with confident assurances that the company will overcome its obstacles (“failure is not an option!”)

The latter approach is easier and feels safer, but it has a huge hidden risk, which is that the CEO will dash hopes and lose credibility. In recent years, new CEOs like AOL’s Tim Armstrong and Yahoo’s Carol Bartz have taken this approach

RIM’s Jim Balsillie, meanwhile, continues to take the other common approach–outright denial of the obvious–and in the process has shattered his credibility. As a result, the chatter about RIM these days is mostly about how delusional its leadership is.

Elop’s memo also accomplishes three important things:

First, it buys him instant credibility with everyone, from employees to customers to suppliers to journalists. People may not like what they’re hearing from Elop, but they can certainly be confident that he’s giving it to them straight. And no one will follow a leader they don’t trust, especially in a crisis.

Second, it allows him to act with the urgency and scope that the situation demands.

Third, it paves the way for him to slay sacred cows, fire popular but obstructionist managers, and give orders that might otherwise result in quiet mutiny.